With Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL) virtually out of his kitty, Petroleum Minister Ram Naik does not want any further erosion of his fiefdom. After stalling the Oil and Natural Gas Commission’s (ONGC) attempt to float a non-government petroleum product marketing company, he has turned down a similar request by Indian Oil Corporation (IOC) for a separate firm that would be outside government control. Earlier last week, Naik asked Petroleum Secretary B K Chaturvedi to advise the IOC board not to be too hasty in approving a new company with 49 per cent IOC equity for products retail business. Ahead of a board meeting on Thursday, IOC Chairman M S Ramachandran was told by Chaturvedi to defer a board decision as the minister felt it was a ‘‘policy issue which required detailed discussion with both IOC and Oil and ONGC’’. The ministry has promised no time-frame for finalising the policy guideline, sources said. Worried about future competition from private and multinational firms in marketing, Ramachandran had sought the ministry’s permission to float a Special Purpose Vehicle (SPV) that, by being outside the government’s control, could take quicker decisions instead of being bogged down by bureaucratic diktats. His view was that IOC — the lone public sector undertaking in products marketing after HPCL and BPCL are privatised — would be able to compete effectively only if it enjoyed a level-playing field with its future competitors. ONGC’s proposal to float a non-PSU ONGC Values Limited with majority equity from ICICI, HDFC or IDFC for marketing also weighed heavily on the IOC’s mind. ‘‘The statutory requirements that IOC has to fulfill and administrative instructions that IOC may have to follow as a PSU company are likely to put Indian Oil at a disadvantage vis-a-vis the private oil marketing companies,’’ Ramachandran said in his letter. ‘‘We are of the view that if marketing of petroleum products is carried out by IOC through an SPV, with IOC having 49 per cent share in this SPV, then it will ensure the necessary freedom required by IOC to compete effectively,’’ he added. Private and multinational firms are gearing up to enter India’s lucrative retail business. Among those who have received government permission to set up retail outlets for petrol, diesel and LPG are Reliance Industries Limited and Essar Oil Limited. Shell has applied for a similar marketing right. ONGC, which received a similar approval last May, had suggested ONGC Values Limited on grounds that it would allow a ‘‘fast and flexible response’’ in a marketplace heating up with the entry of the ‘‘most savvy and aggressive’’ Reliance. ‘‘An already heated marketplace will come to a boil when, either through the disinvestment route or on their own, any of the multinational oil companies also enter the fray,’’ ONGC argued in its board proposal. However, that proposal has been deferred ad infinitum on Naik’s directions. Naik’s views are that the two Government firms were set up with a social responsibility such as helping the weaker sections. That objective would get lost if the PSUs turn private through the backdoor, said ministry officials. His second reason was the experience with non-PSUs such as Indraprastha Gas Limited and Petronet LNG Limited for which the Government is held accountable though they are private entities. ‘‘The responsibility must come with accountability or no such responsibility be given to them,’’ the officials added.
